XCHRX SWEETMART GARMENT WORKS LTD. v. INDIGO INDUSTRIAL LTD.

HCA17757/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.17757 OF 1999

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J U D G M E N T

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1. This is an appeal from the judgment of the master granting summary judgment against the defendant in relation to a contract for the sale of labels between the plaintiff as the buyer and the defendant as the seller.

2. The contract in question is part of a series of three contracts ("the 1st, 2nd and 3rd purchase orders"). The 1st purchase order can be found at page 20 with the contract date being 28 August 1999 and the delivery date of 8 September 1999 for 2,000 odd pieces of label. The 2nd purchase order which is the one we are concerned with can be seen at page 22 of the Bundle with the contract date of 2 September 1999 and the delivery date of 15 September 1999. The quantity in question is some 7,850 pieces of label. The 3rd purchase order, to be found at page 24 of the Bundle, is dated 7 September 1999 with the delivery date of 20 September 1999 and involves 8,500 pieces of label. The unit cost in each case was $1. It can be seen that each of the three purchases involves a fairly small sum of money.

3. The dispute between the parties is that the delivery of the goods under the 2nd purchase order was not effected until 6 and 8 October 1999, so it was sometime after the delivery date stipulated in the contract. The plaintiff said that as a result the late delivery, it had to effect shipment to England by airfreight and therefore incurred very substantial airfreight charges. The quantum of damages had been agreed between the parties at some $300,000 odd. The question before the court today is whether liability can be established by the plaintiff against the defendant on a summary judgment basis. In my view it cannot be. Unconditional leave to defend should be given. Because the matter is going to go to trial, I would limit myself to state very briefly my reasons.

4. There are two points taken by the defendant in defence of the case : one is on the point of the non-incorporation of the terms and conditions, the other is that the delivery date had not been insisted upon by the plaintiff and therefore the late delivery (as a result of the delivery date not being met) should not be insisted upon by the plaintiff.

5. In my view, the first point really does not arise because it does not touch on liability as such and having regard to the fact that the parties had agreed upon the quantum, it seems to me that perhaps the matter can be dealt with at the trial if it should arise. I think what principally concerns me at this hearing is whether the plaintiff is right that there can be no arguable case about late delivery and thus liability for late delivery.

6. The evidence of the defendant is quite substantial and I would not try to summarize it here except to perhaps highlight a few of the points that had been made. The first point is that when the 3rd contract was made, i.e. on 7 September 1999, there was a conversation between the parties whereby the defendant was informed that concentration and urgency should be given to the 3rd purchase order and to delay and hold back the 1st and 2nd purchase orders. The delivery date for the 3rd purchase order is 20 September 1999, so if priority is going to be given to the 3rd, then by necessity, the delivery date of the 1st and 2nd purchase orders are not insisted upon. That, for me, would simply be sufficient to decide this Order 14 matter. Mr Coleman in his usually able submissions referred to me the high improbability of the allegation in relation to that conversation when the 3rd contract was made. But it seems to me that this is really an area where the court cannot speculate too much and is a matter that should really go to trial.

7. It is then further said that because of the various difficulties with the question of whether the labels should be "dry washable", there had been discussions in late September leading in fact to the cancellation of the 3rd purchase order. There was also discussion about the difficulties of appropriate material leading to the parties agreeing to defer delivery of the 2nd purchase order until at least early October.

8. There may be factual disagreements between the parties, but it seems to me that having regard to the affidavit evidence that it is impossible at this stage for the court to form any kind of clear view. I think there is a sufficiently credible case made out that the parties as a result of their discussions and actions, have led the defendant to the firm belief that the original delivery date under the 2nd purchase order was not being insisted upon and that the defendant would have more time to effect delivery which is what happened.

9. In my view, this is not a suitable case for summary judgment. I think the proper course is, therefore, be for the appeal to be allowed, for unconditional leave to defend to be given and for me to give directions as to the further conduct of the case.

10. So far as cost is concerned, the order of costs below should be varied to costs in the cause, and in so far as the appeal before me is concerned, it should be costs to the defendant in any event.